Question

This is a true story that dominated the media worldwide in late 2018 and early 2019 and shook an established and trusted company to its core. Once the crisis was over, 346 people had died as a result of two airline crashes. Agencies like the FAA around the world grounded the 737 Max forcing airlines around the world to put their 737 Max planes into storage and rent other aircraft or cut their flight schedules. After 20 months and losses in the millions, the FAA lifted the grounding in November of 2020 and slowly these aircraft began to return to service.

Deliverables
Analyze the above scenario using the 4 Costs of Quality given below:
Appraisal cost
Prevention cost
Internal failure cost
External failure cost

Answer 1

The Boeing 737 Max crisis can be analyzed through prevention, appraisal, internal failure, and external failure costs. These encompass costs related to preventing defects, testing for quality, rectifying internal defects before delivery, and dealing with the consequences of defects discovered post-delivery, like the tragic airline crashes and subsequent damages to the company and stakeholders.

Step-by-step explanation:

The provided scenario involves analyzing the Boeing 737 Max crisis from the perspectives of the four costs of quality: prevention, appraisal, internal failure, and external failure costs.

Prevention Costs

These are expenses incurred to prevent defects in products or services. For the 737 Max crisis, prevention costs might include the expenses involved in designing safer aircraft features, training for quality control, safety testing, and implementing new design protocols prior to production.

Appraisal Costs

These costs are associated with measuring and monitoring activities to ensure quality and compliance with safety standards. For the 737 Max scenario, appraisal costs might involve testing of software and systems during production, inspection of aircraft, and audit costs to ensure adherence to safety guidelines.

Internal Failure Costs

Internal failure costs occur when defects are detected before the product reaches the customer. In this case, the cost of grounding the fleet, inspecting and repairing the aircraft, and investment lost due to halted deliveries are considered internal failure costs.

External Failure Costs

External failure costs happen when defects are found after the product has been delivered to the customer. The two crashes, compensation to victims' families, brand damage, lost sales, legal costs, and the costs airlines faced when the planes were grounded are all examples of external failure costs faced by Boeing.

The scenario also alludes to security measures post-9/11, which while different in context, also involve heavy prevention and appraisal costs, such as the implementation of sky marshals, reinforced cockpit doors, and sophisticated airport security equipment.

However, the single biggest cost in terms of airline security post-9/11 is considered to be the opportunity cost of passengers' additional waiting time at airports due to more intensive screening processes.